Restaurants
Pre-IPO Black Book (BROS)
We are hosting a pre-IPO black book review of Dutch Bros. today at 2 PM ET. Dutch Bros. is an owner-operator and franchisor of drive-thru shops that focus on serving quality, hand-crafted beverages with substantial average unit volumes. The company's unit returns are best in class. Once public, BROS will be one of the fastest-growing restaurant companies by new store growth at 20% annually. In the past six years, the company has increased its store base from 254 shops in seven states at the end of 2015 to 471 shops in 11 states as of June 30, 2021. The specialty beverage restaurant category is competitive, but Dutch Bros. has a differentiated concept and unique company culture that has been popular wherever it has open despite modest marketing. We'll also dig into coffee consumption trends during the pandemic and whether Starbucks should be concerned.
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At the time of the event, CLICK HERE for the live webcast and materials. |
TACO BELL
Taco Bell is testing a subscription program across 17 locations in Tucson, Arizona, until November 24. The Taco Lover's Pass lets customers order one crunchy taco, soft taco, spicy potato soft taco, or Doritos Locos taco per day for 30 consecutive days through the chain's app at a set price ranging from $5 to $10 per month. The chain expects to see incremental sales from customers taking advantage of the free tacos. In addition, Yum Brands (YUM) execs noted during the company's last earnings call those loyalty members to spend 35% more on their visits after joining the program.
Consumer Staples
GrubMarket bulking up for an IPO
GrubMarket, a software and services provider that helps manage the relationship between food suppliers and customers, raised $120M in a Series E round of funding at a $1B+ valuation. The company’s last round of financing in October 2020 valued it at $500M. GrubMarket is targeting the summer of 2022 to file for an IPO. Toast’s IPO next week will bring more attention to SaaS platforms in the food industry.
GrubMarket’s WholesaleWare software suite is a proprietary SaaS platform that provides financial management, online ordering and sales, inventory management, and CRM tools. The company’s revenues grew over 300% last year and are now at a $1B annualized run-rate. GrubMarket currently has about 40 warehouses nationwide. The company’s largest customer is Whole Foods. GrubMarket has been highly acquisitive, buying 40 companies in the last three years. Last week it acquired Bartolotta, a full-service fresh produce provider to customers in New England, the Mid-Atlantic, and Eastern Canada. Two weeks ago, GrubMarket acquired Atlantic Fresh Trading, a fresh produce provider on the East coast.
Strawberry outlook improving (STKL)
Strawberries are not considered a fall fruit, but nearly a quarter of California fresh strawberry shipments last year were in Q4. As of August 8, fresh strawberry shipments from California totaled 137.7 million crates, down 5% YOY from 145.4 million crates last year, but compared to the shipments two years ago. According to IRI, retail sales of fresh strawberries for the year ended July 7 were up 13.1% YOY. Strawberries represented 4.9% of total produce department sales for the year. The California Strawberry Commission expects the 2021 fresh shipments to be between the 202 million crate crop in 2019 and the 210 million crate crop in 2020.
Frozen strawberries represent more than two-thirds of SunOpta’s Fruit-Based Foods & Beverage division. As a result, we believe SunOpta could seek strategic alternatives for the division when the harvest has returned to historical norms. Still, this year’s harvest looks to be better than previously feared.
Less bubbly? (VWE)
With the harvest now underway in Champagne, it is clear how much damage this year’s weather has done to its crop. Yields are expected to be down 60% this year, making it the smallest harvest in 40 years. Vineyards maintain that despite the smaller harvest, the quality is unaffected. Vineyards will draw upon past wine held in reserve. A shortage from France would benefit US sparkline wine brands, but the Comite Champagne operates a region-wide reserve where producers are required to save wine in bountiful years to offset bad harvests.
